I recently had the great fortune of attending Health 2.0 in San Francisco. The conference was abuzz with new medical technologies that are harnessing the power of innovation to solve healthcare problems including many new mobile medical application companies showcasing their potential. As I walked and talked around the exhibit floor, one thing caught my ear, or I should say one thing didn’t catch my ear. Among the chatter about these products, the concern about FDA regulation of this product segment, or even FDA regulation in general was noticeably absent. While many of the application developers are well aware of potential FDA involvement, most would be hard-pressed to outline the impact this would have on their companies and products.

Being labeled a medical device, which is the direction the FDA is leaning, could have a significant impact on business model organization, top-line revenue, and product deployment. For unprepared start-ups, FDA regulation could signal an end for their company. This is in stark contrast to well informed developers who are preparing themselves for the change and would most likely be able to leverage these regulations to their advantage.

USA Today recently published an article detailing the exponential rise in the mobile medical application (MMA) market which is expected to reach $1.4 billion by the end of this year. According to the same article there are about 40,000 MMAs currently available for download on the iOS and Android platforms. While that might come across as a lot, a recent Health Data Management report expects the industry to grow 23% annually for the next five years.

The FDA, always the keen observer, with help from an Institute of Medicine study, has decided that this is their time to shine. The agency is tasked with protecting patient safety and according to the FDA, this sudden yet massive rise in the number of unregulated MMAs has the potential to adversely affect their core constituency: the patient. In July of last year, the FDA released draft guidance on MMAs and stated their intention to regulate those applications that have the ability to turn a mobile platform, like a smart phone or tablet, into a medical device. While they haven’t yet promulgated final rules regarding MMAs, one thing is all but certain: the market needs to brace for impact.

Setting aside the highly controversial and polarizing debate that is federal regulation, the apparent lack of concern is a concern in and of itself. Many industry insiders are well aware of the effects of being labeled a medical device but that knowledge is not trickling down to the target audience, the developers and entrepreneurs looking to capitalize on the extreme MMA growth. Being a medical device has some positive benefits like being able to label a product as FDA approved and ensuring that the product is safe for patients to use, thus decreasing potential product liability. Yet this label comes at a lofty price.

In order to get FDA approval a company must first submit a premarket notification, or 510(k), which allows the agency to determine if any substantially similar device has already been approved, thus allowing the product to “piggy-back” on the previous device’s approval. A 510(k) application is no laughing matter, costing $2,500 just to submit, provided an exception doesn’t apply. And that’s just the tip of the iceberg. In 2010 an independent study conducted by a multitude of parties including the Medical Device Manufactures Association, the National Venture Capital Association and Stanford University medical professors, among others, concluded that “the average total cost for participants to bring a low-to-moderate-risk 510(k) product from conception to clearance was approximately $31 million, with $24 million spent on FDA dependent and/or related activities.” The study also found that the average approval time for a 510(k) application was 31 months from the first communication to the FDA and 10 months from the first filing for clearance. This is by no means an assertion of the actual cost an MMA developer would incur and while the study’s findings are still being hotly contested, the message is clear: The FDA’s 510(k) approval process is cumbersome, costly, and time consuming, all of which come together to create the perfect storm of regulatory hurdles that could stifle medical device innovation.

Yet the MMA market is thriving despite the looming threat of potentially having to spend millions to get FDA approval. It is my belief that the cause of this apathy is not entirely one of willful ignorance but instead rests mostly on the lack of information being supplied to developers. For them the immediate concerns about creating a profitable product are at the forefront while the thought of regulatory problems are pushed to the back. This makes sense if you think about it. Since the FDA hasn’t promulgated final regulations regarding MMAs, the potential for regulation is just that, a potential, albeit a real one. So expending precious resources to gather information about the FDA is just not as important as focusing on immediate profits.

While it might make sense, this myopic thinking is extremely dangerous for start-up developers. By not preparing for the cost of 510(k) approval, in addition to the added time for product deployment, these start-ups are ignoring a barrier that could ultimately cost them their company. I’m not saying that these companies need to secure millions in funding immediately; instead they simply need to inform themselves of the costs and build that additional information into their already existing business model. Not only will this allow them to not be blind-sided by regulation, but they will also become more appealing to venture capital firms who will be more than pleased to know that what they are spending their money on won’t whittle away under the weight of the FDA. Enterprising developers can implement the FDA mandated current good manufacturing practices (CGMP’s) so they don’t have to retrace their steps in the future in order to be in compliance, thus helping speed up the approval process. FDA regulations will be a barrier to entering the MMA market and taking the proactive steps of information gathering and preparation will increase the chance of being one of the first to be approved to market.

What’s the lesson in all of this? The answer is quite easy: information is power. And with that information, a budding MMA start-up can adequately prepare for the effects of regulation. Instead of discounting the future costs imposed by the FDA, companies need to embrace them and create a viable business model with the new information. So the next time I walk and talk around an exhibit floor I will hope to hear chatter about the latest and greatest MMAs while also catching some conversations about regulation. Then I will know that the market is ready for the great challenge that is the FDA.

Ryan Minarovich is Chief Executive Officer of The Tenzing Group, LLC, a regulatory coaching firm providing FDA and legislative guidance to mobile medical application start-ups and developers. He is a member of the AHLA, HIMSS, and serves on the HIMSS Legal Task Force. He is also in his last year of law school at Santa Clara University School of Law where he focuses on agency regulation, EHR legal policy, and NwHIN architectures. You can contact him at ryan.minarovich@tenzinggroup.com or by visiting www.tenzinggroup.com.

The best way to prepare for potential FDA regulation is to develop and test apps in a way that supports the 510(k) process (and document it).

This might require more in quality management systems and use of user-centered design (UCD) than is currently used, but it will pay off handsomely in the future, both in the quality / safety of the products developed and in the preparation for FDA requirements.

I’m not sure that Washington is willing to jump in and do this, and I think that’s the gamble that a lot of people are taking

Regulating technology is the fourth rail of poliitics in America today, do so and you risk being labelled anti-business, anti-progress, anti-innovation., etc

True, the FDA is theoretically independent and should be above these things, but this is Washington, and the usual rules of political gravity still apply, even though we say they don’t

Having seen how ugly Twitter and Facebook protests can get, I’m not so sure Washington is too eager to start pissing large numbers of constituents when e decision can safely be deferred for, say, another ten years …

Of course, I’ll admit that I am not that familiar with the politics of the situation (as usual all of the fun is happening behind closed doors) perhaps somebody can give us more insight into what is happening …

Great points. The truth of the matter is just what you said. Nobody knows what is really happening. The Institute of Medicine released a study that criticized the lack of any sort of national executive regulation for EHRs and determined that the FDA would be ill suited to do the job right now, but as it stands would be the only body capable of attempting it. The FDA has said it will release draft guidance for clinical decision support software (CDS), but that was last year and we all have been left waiting. I think regulation can come in two forms, both within the FDA. (1) The FDA can decide to regulate health information software, including MMAs, within the current framework (i.e. put them in class I, II, or III). (2) HHS and FDA can work together to create another agency tasked with regulation only mobile health, like an Office of Mobile Health. Either way I think the FDA will still be the body to regulate.

As to your point, I think the reason the FDA is waiting so long is exactly what you pointed out. They know how cumbersome their regulations can be and they don’t want to stifle an exploding market. The best we can do is wait and see, but its best to prepare for regulation than not prepare and be suffocated by the requirements.

There are cGMPs for both drugs and devices. Under 21 CFR S. 820, a device manufacturer must have a Quality System (QS) in place in order to meet the FDA’s requirements. While the FDA does not specifically say what a company has to do, they do offer a sort of “umbrella” approach. For example, “Each manufacturer shall establish and maintain procedures for the identification, documentation, validation or where appropriate verification, review, and approval of design changes before their implementation.” So while the FDA has the over-arching rules in place, a manufacturer is allowed significant leway on how to accomplish these tasks. Check out http://www.fda.gov/MedicalDevices/DeviceRegulationandGuidance/PostmarketRequirements/QualitySystemsRegulations/default.htm for more information

The lack of FDA regulation of health IT to date is based on two factors: lack of FDA resources and White House pressure.

Neither are likely to change in the short or medium term, but a big, ugly incident (perhaps involving a political official, celebrity or a family member) could result in a call for immediate action (since, of course, there’s no denying that serious incidents have occurred and will continue to occur as HITECH “succeeds”).

What’s most likely to occur is renewed calls for incident reporting through Patient Safety Organizations (PSOs). Like that’s every worked.

Well a very nice step taken by the FDA. This will surely start regularizing such apps which provide unauthentic data about several drugs. Not only these apps are solely made for earning the revenues having unverified data. Patients / drug users will surely access them for not only their safety concerns but it may also end up in abuse. Yep I agree for some meds only, but an abuse is somewhat we cant take risk with it.

I found this article to be very interested seeing as I am going through the 510(K) process for nothing more than a paper cup with a lid and filter.

My invention icalled Coughy Cup(TM). Itcaptures, contains, filters and kills 99.9% of germs and viruses. The purpose is to mitigate germs in confined areas like schools, school buses, airplanes, hospitals, daycare centers and other similar places.

A major PR campaign will begin on Twitter, Facebook, Youtube and other social sites and TV and radio in a few weeks.

Since our Coughy Cup is a class II device, I am hoping the process won’t be as terrifying as pointed out in the article. As one person commented, the blow-back from angry people using social sites can be the fourth rail in the world of politics. Our studies show the public overwhelmingly want our cups on the market. Should be interesting to see what happens. If anyone has any advice for me, please pass it along. I can be reached at CoughyCup@gmail.com

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